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Did Gold shine in 2008?

I know that some will point to the bad stock market, down nearly 40% depending which index you follow, as a confirmation of the value of gold in one’s portfolio. First, a look at the gold ETF chart for the past year;

Gold was up 4.9% last year. Only slightly better than CDs, and worse than longer term Treasuries as interest rates fell dramatically, and bonds rose. I’ll admit that gold has had a good run in the last 4 years or so, but go back to the last time it ran up, 1980, and you’d find that you are now at breakeven, 28 years later. How come no gold bugs ever said “sell” during any of these three decades?

Joe

  • Augustine January 3, 2009, 12:58 pm

    However, since the crash, unlike stocks, GLD rose by 25%, perhaps as it performed a role of safe “currency” (whatever that means) at the prospect of newly minted $700B+ inflating the dollar. Yes? No?

  • JOE January 7, 2009, 11:39 pm

    I understand. Gold has been on a hot streak, up 80% in 5 years vs the S&P index down 20%. But as a long tern buy and hold, gold falls short.

    I suppose the value could be in having some portion of one’s funds allocated to gold. If, before crash, one had, say 10% in GLD, 40% stock, 50% bonds, the account certainly would have not taken quite the hit of 100% stock. But is 10% enough? If not, how much? Too much and over the decades, you’d fall behind. Gold is best used by market timers.

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